• Home
• About/Contact
• Economic Reports
• Research
• Advertising

• Business
• Economics
• Reports
• Finance
• Marketing
• Politics
• Real Estate
• Services
• Retail
• Tech

Subscribe

Japan consumer prices see 0.2% rise in December, flat when energy prices stripped out

According to data released today by the Ministry of Internal Affairs and Communications, Japan’s “core” consumer prices rose just 0.2% in December as declining oil prices continue to add deflationary pressure. December was the fifteenth month in which core consumer prices rose.

As Japan includes energy prices as part of its core CPI, it’s always helpful to look at what the CPI looks like with energy stripped out. Here’s a breakdown of CPI categories for December:

• December general nationwide consumer price index: +0.4% (+1.0% in November)
• December general nationwide consumer price index (excluding rent): +0.4% (+1.2% in November)
• December nationwide core CPI (excluding fresh food): +0.2% (+1.0% in November)
• December nationwide consumer price index (excluding fresh food and energy): 0.0 (+0.0% in November)

These figures are a far cry from the oil-price-induced inflation that was seen over last summer. Let’s take a look at how individual categories contributed to December inflation: Read more

Japan retail sales down 2.7% in December

According to figures released Thursday by the Ministry of Economy, Trade and Industry, retail sales fell 2.7% in December, while wholesale sales fell 13.9% and commercial sales were down 11.3%. Sales at large-scale retail outlets were down 5.0% in total, and 6.3% when adjusted to same-store results.

December’s drop in retail sales was the largest seen since February 2005, and was the fourth consecutive month in which retail sales fell. Sales at large-scale stores fell in nine months in 2008 (ten months by the adjusted figures), with December showing the largest fall. For the October-December quarter, retail sales fell 1.5% against a year earlier.

Wholesale prices, the Bank of Japan and deflation

In an opinion piece reprinted by the International Herald Tribune, Martin Hutchinson of breakingviews.com asserts that “Japan repeats its mistakes” from the 1990s by “injecting capital into failing companies through government banks.”

It’s difficult to disagree that a 6.5% increase in public spending is a bad thing, especially given Japan’s precarious demographic situation (for more on why the often-cited 6.5% increase in public spending might be a tad misleading (it compares initial FY2008 budget figures to FY2009, rather than what actually happened in FY2008), see the third paragraph of Edward Hugh’s recent post over at Japan Economy Watch. Personally, I don’t think the figure is misleading so long as a writer mentions that it may be somewhat misleading). At any rate, back to Hutchinson: one line in the article really caught my eye:

Japan has avoided the housing problems and stock market bubbles that have bedeviled Western economies, but it is again suffering severe deflation, primarily because of the yen’s sharp rise and the downturn in world trade.

Deflation is certainly a risk, and is looking ever more certain - tomorrow’s CPI figures will make the timing more certain. I’m expecting CPI with food and energy prices stripped out to be flat or slightly negative (-0.1% or -0.2%) when the numbers are released (it was flat in November).

Despite the fact that it seems early to call deflation in Japan “severe,” it might be within a few months, and I agree with the other 99% of the piece. Thus, it’s worth contrasting it to what Bank of Japan Deputy Governor Kiyohiko Nishimu had to say yesterday, as he seemed to indicate a lack of worry over deflation setting in: Read more

Development Bank of Japan to invest directly in firms?

Earlier today, Bloomberg reported that the Japanese government is considering a plan that would allow the Development Bank of Japan to buy preferred and common shares in Japanese firms. According to the report, “The government will guarantee a portion of the investments should the companies go bankrupt.”

What portion would that be? The Nikkei reported the same day that public funds would be used to cover up to 80% of the investments. In case you’re worried that foreign firms might be the recipients of public funds, the Nikkei tells us that an unnamed METI official described the bailout like this:

Only companies that have deep connections to regional economies and growth potential would be eligible to receive the capital infusions from the Development Bank of Japan or other authorized banks.

METI minister Toshihiro Nikai stressed that the program is meant to ensure that private financial institutions are able to lend, rather than setting up a mechanism by which the government injects public funds.

Bloomberg tells us that the Development Bank of Japan will raise funds by selling bonds and tapping existing reserves of cash, rather than employing public funds directly to make investments in firms.

Japan’s convenience store sales up in 2008, top department store sales for the first time

According to data released Tuesday by the Japan Franchise Association, convenience store sales in Japan rose 6.7% in 2008, for the first yearly rise in nine years. On the same day, it was also announced that convenience store sales in December increased 8.5%.

Despite the continued slump in department store and supermarket sales, Japan’s convenience stores have enjoyed a robust 2008. For the first time ever, convenience store sales in Japan have exceeded sales at department stores; department store sales were at about 7.4 trillion yen while convenience stores rung up about 7.86 trillion yen in 2008.

Increased tobacco sales due to the introduction of the Taspo card was a major contributor to the spike in convenience store sales in 2008, and the year-on-year effect of increased tobacco sales will last until July of this year. Still, it seems likely that the recession, the increasing number of single-person households, more diverse product lineups and the introduction of store brand items - at 7-11 in particular - also contributed to the sales increase at convenience stores last year.

It does appear as though convenience store sales are rising when the boost in tobacco sales is stripped out. If that continues into 2009, convenience store operators might find themselves in the uncomfortable position of hoping for a longer recession than is expected.

Amidst drops in output, Japan’s power companies see 13% decline in industrial power sales in December

According to data released today by the Federation of Electric Power Companies of Japan, Japan’s industrial power sales fell by 13% in December. That drop was the highest seen since the federation began tracking figures back in 1972. The largest decline was seen in the steel industry, at 24.8%.

A breakdown of the decline in sales to the major industry categories:

• Textiles: -14.4%
• Paper and Pulp: -9.7%
• Chemicals: -14.8%
• Ceramics: -8.1%
• Steel: -24.8%
• Nonferrous metals: -18.1%
• Machinery: -18.1%

With further cutbacks in output expected, it seems unlikely that the bad news will end for power companies any time in the next quarter.

Japan consumer confidence index drops to fresh all-time low in December

Earlier today, the Cabinet Office released consumer confidence index figures for December, and the index dropped 2.2 points to 26.2, marking the third consecutive month that consumer confidence has hit an all-time low.

Japan’s consumer confidence index thus set record lows for six of the twelve months in 2008 – from June to August and from October to December.

The consumer confidence index itself contains five scores, each of which is considered positive when above 50, and pessimistic when below the 50 mark. Here’s a breakdown for December figures, with the change from the previous month: Read more

Japan’s department stores see record 9.4% fall in sales for December

Recent news reports on retail sales had been bleak, and thus a decline in department store sales for December seemed inevitable. Earlier this month, the Nikkei reported that December sales at Isetan had fallen by about 10%, while Takashimaya saw a 10.2% fall and Matsuzakaya declared a whopping 13.7% fall in sales for December.

Thus, it’s not too surprising that nationwide department store sales fell by an all-time record of 9.4% in December, according to figures released today by the Japan Department Store Association. Aside from months when sales were held down over reactions to consumption tax increases, this is the largest drop seen since department store sales data began being tracked in 1965.

December sales came to 794.7 billion yen, for the tenth consecutive month of decline. Here’s a breakdown of sales by individual categories: Read more

Toyota shut down (almost?) all domestic production facilities yesterday

Several reports on Toyota hit the media today, and we’ll just take a quick look at two of them. First, the Nikkei is reporting that Toyota shut down all twelve of its domestic production facilities yesterday, and intends to close them again twice more in January. This will be followed by 11 days of closure over February and March.

The Japan Times published a Kyodo report stating that Toyota had closed 11 of 12 production facilities yesterday, in an attempt to bring new vehicle production down to about half of last year’s level. According to Kyodo, production cuts will reduce Toyota’s output to 11,000 units per day, which is the effective borderline for profitability.

In addition, Toyota has announced plans to suspend production at all seven of its North American factories for up to 30 days from January to March.

BizCast Japan #16 published at Trans-Pacific Radio

BizCast Japan #16 has been published over at Trans-Pacific Radio. This edition of the show is a look back at the top eight business stories of 2008 and includes a look at:

The growth of foreign labor in the Japanese workforce, the Children’s Investment Fund, successful retailers during the recession, the opening of the Fukutoshin subway line, the re-branding of Matsushita as Panasonic, the debacle over nominating a new governor to the Bank of Japan, the arrival of the iPhone, mass bankruptcies in the construction and real estate sectors, food safety and self-sufficiency rates, inflation and deflation, the workforce during the recession, the establishing of the Tourism Agency, Nomura, McDonald’s setting the all-time record for sales by a restaurant in Japan, Steel Partners, DoCoMo’s drop below 50% of market share, lawsuits over overtime pay and the state of the automotive industry.

Which stories made the top 8 of ‘08? You’ll have to listen to find out.

Next Page »

Copyright © 2006-2010 Japan Economy News

Privacy Policy | Disclaimer